2018 Housing Market Forecast

Will 2018 be a volatile year for the GTA housing market? Or will buyers, sellers and investors experience flat prices and the positive impact of recent Government intervention, a hot rental market and the rate increase by the Bank of Canada?

Pricing

Amid any potential volatility, prices could stabilize, offering value to people who qualify for a mortgage under the new rules. This could help counteract the measures that have been recently introduced to calm the market. Even if national gains are made, the GTA’s performance and importance to Canada’s housing market could keep these gains in check.

Flat pricing could impact most of the GTA but several areas could still see an increase.

Pockets of Growth

The GTA is a large market so assigning one prediction to every corner is difficult. This year could see the GTA experience schizophrenic growth. With a higher interest rate and unsustainable growth, Brampton, Aurora and Markham could see some decline. Oakville could continue its growth, as more residents look to buy in the west based on larger properties and access to central Toronto.

Any growth might take until the second quarter as borrowers adjust to the new interest rate.

The Interest Rate

The Bank of Canada, who controls the key lending rate, raised its interest rate due in part to uncertainty with NAFTA. Other lenders will follow, if they haven’t already. This will make it harder to people to borrow and continue the trend of inflating the rental market.

The outcome could be fewer mortgage applications and even less approvals. With less mortgages and people entering the market, the housing market could slow. Experts have also predicted another rate hike later in the year.

Upturn or Slowdown

The GTA housing market could speed up and slow down through the year. There will be market corrections and both borrowers and lenders will adjust to the new rules and interest rate. The result will be borrowers having less funds to buy a house. Of course, these borrowers will be better vetted and the demand should adjust to the supply.

The safest prediction is that any decline will be temporary and investors could experience nice gains starting later in the year and heading into the following year. A wait-and-see approach is the best way to tackle 2018.